THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Monday, December 26, 1994 TAG: 9412230468
SECTION: BUSINESS WEEKLY PAGE: 8 EDITION: FINAL
TYPE: Cover Story
SOURCE: BY STEPHANIE STOUGHTON, BUSINESS WEEKLY STAFF
LENGTH: Long : 161 lines
On any given day, Jim Wanzong works as a janitor, mechanic and salesman at the new Peebles department store in Norfolk.
But his name tag says manager.
W.S. Peebles Sr. would have been proud.
The founder of Peebles Inc. didn't believe in perks or extravagances. Building a chain of stores across small-town Virginia, W.S. Peebles was after customers who drove Fords and Chevrolets, so he never drove a Mercedes-Benz.
Wanzong's store in Southern Shopping Center looks nothing like the feed-and-seed company W.S Peebles first opened more than a century ago. For one, it's located in an urban area instead of the rural communities that Peebles adored over the years. And the company has evolved into a full-line chain of 58 department stores.
But one thing hasn't changed: the company's philosophy. Peebles Inc., which now has annual sales of more than $150 million, has opened new stores only in underserved areas and has managed to keep strong leaders at the helm to steer the chain through troubled times.
W.S. Peebles opened his first store in 1891 in Lawrenceville, about 100 miles west of Norfolk, selling fertilizer and feed to farmers.
Peebles, whose sales exceeded $150 million last year, long stayed true to its small-town roots. New stores were opened only in areas it considered underserved. Like Wal-Mart, the mammoth discount chain, Peebles located primarily in towns and learned to skip the big cities.
It closed a store in Winston-Salem, N.C., and three in Charlotte that had been acquired from The Collins Co. in 1981. They didn't work out for several reasons, including high rent.
For years, staying out of the big city was a rule of thumb for the South Hill-based company. But executives discovered that pockets in urban areas didn't have department stores. Indeed, those pockets had many of the same characteristics as the towns in which Peebles did business.
In Richmond, the company pinpointed a site in Fairfield Commons shopping center. The key to this location was that area residents had to travel several miles to shop at department stores, said Steve Hannah, a Peebles vice president.
``We evaluated it and looked at the tremendous number of people who weren't being served unless they crossed Interstate 95,'' Hannah said.
The Norfolk store opened this fall in Southern Shopping Center off Tidewater Drive. It is about 10 miles from Military Circle mall, the largest retail center in Norfolk.
The store represents Peebles' second venture in Hampton Roads. Peebles long has operated about 40 miles north of Norfolk in the community of Gloucester Point.
Unlike Wal-Mart, the company doesn't expect to draw customers from Virginia Beach and Chesapeake to its new Norfolk store. Instead, it relies on the people who live in surrounding neighborhoods like Colonial Heights, Chesapeake Manor and Suburban Acres.
``We're not really trying to take on Norfolk,'' Hannah said. ``We're trying to take on one area that's not being served by department stores.''
Under the current head of Peebles, Mike Moorman, the strategy of locating in underserved sections of cities has worked.
But it hasn't always been smooth sailing for the company. Over the last several decades, the business has hit several snags.
When Williams S. Peebles III, commonly referred to as Bill Peebles, took over the company in the early '70s, its direction was hazy.
``While the company had money in the bank, the business was virtually mired in a method of operation that was closer to death with the opening of each new shopping mall or strip center,'' author Howard E. Covington Jr. wrote in his book Peebles: A Retail Tradition Begins Its Second Century.
``Bill Peebles knew enough about the changes in retailing to see that small independent department stores were dinosaurs,'' he added.
Bill Peebles began to centralize the company, which angered managers who had run their stores at their own discretion. But it was necessary: Bills weren't being paid, good managers were getting harder to keep and bookkeeping was haphazard.
It wasn't easy.
Even Moorman, the current president and chief executive, was initially riled by the changes.
``We saw him centralizing very rapidly beginning with the purchases of shoes, and then the home departments,'' he told Covington. ``We didn't like that. That was the start of a struggle that existed until the middle 1980s.''
Under Bill Peebles, the company's charge accounts and merchandise information were put on computer so executives could figure out exactly how much customers owed and were buying at the stores.
After his 1975 heart attack, Bill Peebles began handing over much of the business to Moorman.
Under Moorman, the company continued to open new stores. By the 1980s, they had evolved into small department stores, typically about 30,000 square feet, heavy on designer cosmetics, apparel, linens, shoes and accessories.
Customers and salespeople sometimes refer to Peebles as a ``baby Hecht's.''
Then, everything changed.
Retail sales were sluggish in the mid-'80s, and Peebles executives began talking about selling. In 1986, Peebles was bought by Investcorp, a group of investors based in Bahrain.
While Bill Peebles continued as chairman, and Moorman remained vice president, the company's owners put Peebles up for sale again.
This time, an investment group led by PaineWebber Inc. bought Peebles for $152 million in 1989.
When Moorman became top executive in 1989, he took a hard look at Peebles' finances and discovered he would have to restructure the company's debt, which had ballooned in part because of the Collins purchase.
The company's reputation for conservative management and good planning convinced creditors to work with them, Covington said. And the cloud began to lift during Peebles' 100th anniversary.
``I think 1991 was a hard time for them,'' Covington said in an interview.
The author remembers Peebles executives being worried about the book, which was commissioned by the company, coming out when Peebles was still struggling to right itself.
``That was the only anxiety they had,'' Covington said. ``I remember telling them, `You have to put the good with the bad.' ''
Under Moorman, the company recently has gone on an aggressive growth mode. It opened six stores this year and has more planned for 1995. Peebles has 58 department stores stretching from Geneva, N.Y., to a small town south of Myrtle Beach, S.C.
Merchandise in the stores also is more focused, said vice president Hannah.
``In terms of the physical size of the stores - our prototype is about 30,000 square feet - it has to be,'' he said.
Indeed, the prototype store in Norfolk has managed to keep a balance between space and merchandise. Racks of clothing are carefully displayed so customers have room.
Retail analyst Kenneth M. Gassman Jr. said shoppers subconsciously react to low ceilings and an otherwise cavelike environment.
The Peebles store off Tidewater Drive has high ceilings with white decorative columns. Vases and other pieces decorate the shoe section in the back center and other areas of the store.
While Peebles leaders have moved the company to keep up with customers' desires, they have resisted change in areas that have made up the business' foundation: hard work and low prices.
Chief executive Moorman, for example, still putters around in his Oldsmobile.
And on a recent day, 31-year-old Jim Wanzong, manager of the Norfolk store, stopped at the bank, worked the sales floor and unloaded trucks.
``They expect us to sell,'' Wanzong said. ``But I also change light bulbs and empty the trash.'' ILLUSTRATION: Color cover staff photos by Joseph John Kotlowski
[color interior shot of a Peebles store.]
Customers look over jewelry at the Peebles department store off
Tidewater Drive in Norfolk, the company's first venture in South
Hampton Roads.
Manager Jim Wanzong talks to an employee at the new Norfolk store.
Assistant manager Carolyn Honeycutt, left, rings up a sale for
Johnnie Fuselier.
Color staff map
Peebles stores
[Southern Shopping Center, location of Peebles.]
[For Virginia and Maryland stores, see pullout at left.]
by CNB